I'm Lucy, and I'd be happy to answer your questions today. I'm sorry to hear that this happened.
Because you voluntarily gave him the supplies, if you report the items as stolen, the police will likely tell you that this is a civil issue and suggest that you sue in Small Claims Court for a refund. However, it is possible that since he's holding people's keys, which gives him access to their homes, an officer will go out and talk to him to try to get them back. They don't have to, but they might, so you can call them if you'd like.
State and federal law prohibit an employer from withholding funds from an employee's paycheck if doing so would bring him below minimum wage for the hours worked. I know that you said he's an independent contractor, however, independent contractors are usually paid for the job, not per hour. So if he complains and a judge finds that he really is an employee, you could be charged with a third degree felony. You can, however, return his paycheck and then sue for the value of the equipment he refuses to return.
He has a right to report you to the IRS if he believes that he really was an employee, not an independent contractor. Short of reaching some kind of settlement with him, there really isn't a way to stop him. If you're doing everything you're supposed to do, then you don't have anything to worry about. If the people who work for you ARE employees, then it may be better to know so you can figure out the next step.
Generally, employees work when and where the employers tells them, using employer equipment, and are assigned specific tasks. They're paid by the hour, and the employer tells them how to complete the work assigned. Having a flexible schedule or providing the employer with availability does not automatically make someone a contractor. Independent contractors are paid by the job, and they are usually free to accept a given job in any way they wish, as long as the job is done. Independent contractors frequently use their own equipment to do jobs. The key is how much control you have over the work.
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